The PIMCO Inflation Response Multi-Asset Fund uses a multi-asset approach to identify and hedge risk to protect against inflation and may even take advantage of it, the company claims, by investing in a range of assets that might respond to different types of inflation, such as Treasury Inflation Protected Securities, commodities, emerging market currencies, real estate investment trusts and gold. PIMCO actively manages the asset allocation and underlying investments and incorporates tail risk hedging strategies intended to limit the impact of severe market shocks. These strategies are designed to protect against downside risk while positioning inflation-related assets to benefit from inflation dynamics. PIMCO defines tail risks as widespread, severe market declines.

“We believe that investors should always be prepared for the risk of rising inflation. In fact, although commodity prices have eased lately, we see them continuing to rise over the next few years,” said Worah. “A weakening U.S. dollar combined with what we see as the Federal Reserve’s inflationary bias will also add to this longer-term inflation pressure.”